Francisco Goldman says he was a "naive, suburban American kid" until he spent time in Guatemala, his mother's birthplace, in his mid-20s. "I knew nothing. It was 1979, the most violent year of the war in Guatemala City. But I was writing surreal New York love stories," he says. Then a medical student friend smuggled him into the hospital morgue disguised as a doctor. "There were bodies piled up like firewood," he recalls. "Some were horribly mutilated, burned with cigarettes, or with their genitals cut off. It was like falling into a bottomless hole I've never completely crawled out of."

Goldman spent the next decade covering the wars in the US "backyard" of central America - mainly Guatemala, Nicaragua and El Salvador - for the New Yorker and other magazines. The experience fed three richly baroque novels that map common terrain between the United States and Spanish-speaking America, and whose characters, like the author, inhabit both languages. The Long Night of White Chickens (1992), set in 1980s Guatemala, marries detective fiction with the polyphony of the Latin American boom novel. The Ordinary Seaman (1997), shortlisted for the Impac award, is a fable, written in the language of the barrio, about a crew of central American sailors marooned on a ghost ship in Brooklyn harbour. The Divine Husband (2004), a fictional portrait of the Cuban poet and liberation hero José Martí, traces ties between 19th-century Guatemala and New England.

His first non-fiction book draws him back to the aftermath of Guatemala's 36-year war, which ended in a peace agreement in 1996 and a controversial amnesty for war crimes. The Art of Political Murder: Who Killed Bishop Gerardi? (published this week by Atlantic) is the result of Goldman's seven-year investigation into the killing of a Catholic priest in 1998. Juan Gerardi, a liberation theologian and human rights leader, was found bludgeoned to death in a garage in the capital, two days after publication of Guatemala: Never Again, a church-sponsored report implicating the government in the deaths of 200,000 civilians, many of them Mayan Indians.

A surreal cover-up entailed the arrest of a fellow priest - thought to be homosexual - and a cook. An old German shepherd dog, improbably suspected of having mauled the bishop to death, was impounded. But Church lawyers, dubbed the Untouchables, alleged a chain of responsibility reaching up to the president. In 2001, three army officers and a priest were jailed - verdicts finally upheld in a landmark constitutional court ruling last April. Goldman's book may have had an impact on last November's presidential elections in Guatemala, when the candidate General Otto Pérez Molina, whom Goldman names as possibly implicated in the case, was defeated.

The book, which explores a culture of impunity, rising narco-power and media manipulation, has drawn comparisons with Gabriel García Márquez's News of a Kidnapping (1996), as well as praise from Salman Rushdie and Richard Ford. For the fiction writer Junot Díaz, it "peels away sensational obfuscation to expose the lies, skulduggery and abuse of power in the aftermath of the proxy wars America is so good at. But it also speaks at a metaphorical level to a larger world. Frank is fearless; nothing could shake him off the track."

"I got hooked," Goldman says in his Brooklyn apartment in New York. "It was ruthless theatre. They created a fiction and got it walking, and to this day it protects them." He has taught at García Márquez's school - the Foundation for Ibero-American journalism - in Colombia and is incredulous that the Peruvian novelist Mario Vargas Llosa lent support to theories debunked in the book. He witnessed an "almost Stalinist" campaign of defamation and intimidation in Guatemala. The Untouchables' lives "were destroyed - the most decent people I've ever met. It used to eat me up and infuriate me. When I see a blatant injustice, I can't keep quiet. I've been that way since I was a little kid."

At least 10 potential witnesses were killed. Most shocking for Goldman was when the younger brother of the chief prosecution lawyer was found tortured and murdered in 2006. "They'd torn a leg off while he was still alive," Goldman says. "Till then, I could have invested in the narrative like a novel. But I realised it's not just a detective story about idealists, but something you're not in control of." As a prominent outsider, he felt protected, but "what really worries you is they can go after people close to you. My wife loved Guatemala, but I had to tell her: 'You'll never set foot there again.'"

In 2005 Goldman - who also has an apartment in Mexico City - married Aura Estrada, a young Mexican who was a creative writing student of Peter Carey. Last summer Estrada died while swimming off the Mexican coast. Goldman made frantic efforts to resuscitate her. It was a "freak accident", he says. "We were playing on the waves, body-surfing. It makes no sense." As part of a campaign of disinformation against the book, a false rumour was put about that Goldman was wanted by the Mexican police over his wife's death. "They're cowards," he insists. "They were never able to refute a single detail in the book, but they launched incredible tirades."

Goldman was deep in mourning on a US publicity tour last autumn. "I was suicidal, drinking too much. I felt I was behind thick glass crying, yet doing a good job, like an actor." On Halloween night, "I was reeling around in the dark, drunk off my ass, and got hit by a car". Doctors feared he had a brain haemorrhage ("I remember thinking I didn't care"), but he resumed the tour "in bandages, feeling like an idiot. I thought, that was your chance to die, and you missed it. Since then, I've moderated my drinking."

Born in 1954 in Boston, Goldman had a "confused upbringing". His aristocratic, Catholic mother married an older Jewish-Ukrainian American who was a chemical engineer in a false teeth factory ("because of Jewish quotas, he couldn't go to medical school"). They split up repeatedly, and so Goldman's early childhood was spent "bouncing" between Guatemala and a "brutal" Irish-Italian suburb in Massachusetts.

At the University of Michigan, he avoided giving his characters surnames so he "wouldn't be defined by place or ethnicity. I thought I'd write like Henry James or Conrad or Kipling." He felt "pulled towards fiction that was more real, urban, violent, politicised. But I wasn't ready for it." He left college a year early and moved to New York, where he worked as a waiter.

When he suggested writing in his family's lakeside chalet outside Guatemala City his uncle told him he was crazy, as guerrillas had just overrun the police station. He soon learned of the many people found tortured, and that 38 peasants (including the father of 1992 Nobel peace prize winner Rigoberta Menchú) had died while protesting near his house."That moment as a voyeur in the morgue was life-changing. I could have retreated into my love stories. But something in me got profoundly shaken. I wondered, who are these people? Who crushed their fingers?"

Guatemala's war, which had roots in a CIA-sponsored coup in 1954, pitted guerrilla insurgents against the US-backed "counter-terror" of the army and death squads. "My two parts of the world were at war," Goldman says. "I thought US policy in central America was criminal, and that I could maybe influence it. It's partly what I do in fiction - give expression to voices that are not heard."

Rogerio Graetz, the autobiographical hero of The Long Night of White Chickens, is a Guatemalan-American with Jewish-mestizo features who investigates the murder of the woman he grew up with - she had been accused of running an adoption racket for Guatemalan orphans. For Goldman, it showed the war as a "battle of contending realities", not just over bullets and bodies, but descriptions. His literary guides were Faulkner's Absalom, Absalom!, Vargas Llosa's Conversation in a Cathedral and Günter Grass's Dog Years: "complex narratives about the relationship of storytelling to history - tragic history." John Sayles's 1997 film Men With Guns was inspired by the novel.

The Ordinary Seaman grew from news in 1982 of Nicaraguans lured to Brooklyn to crew a leaky freighter that never sailed. Goldman went to listen to their stories. It was the "perfect literary vessel: Heart of Darkness backwards, with brown men coming to the big white jungle. An urban Robinson Crusoe, a modernist Beckett, like the Odyssey, but the ship doesn't go anywhere." The main character, Esteban, was based on young Sandinistas in a "fable about disillusionment as well as exploitation". Moving to Mexico City in 1995, Goldman spent a month on a freighter and wrote as the wars he had covered were ending, and a nine-year relationship had broken up. "I felt like a shipwrecked castaway," he says. "Everything that had defined my existence was gone. That was the emotional spark that lit the narrative."

Though Goldman's aim is partly to create "English sentences that sound like Spanish", Díaz scorns attempts to paint him as a Latin American who writes in English. He is "writing American literature in the truest sense". "Frank knows you can't understand a nation in isolation, outside its relationship to the past and its neighbours. Those borders don't exist."

Linking a Guatemalan convent in the 1870s with a balloon factory in Massachusetts, The Divine Husband is about miscegenation in a world tied by trade and trysts. It was written in tandem with The Art of Political Murder, and is, Goldman says, "almost girly and sweet - an antidote to the darkness of the case".

He believes Guatemala's new centre-left president, Alvaro Colom, a Mayan priest who took office on January 14, is likely to reopen the Gerardi case and push for more prosecutions, "where state power intersects narco-power. It'll be very dangerous - they'll kill anybody." For Goldman, it has already "opened a path in the darkness. Being able to prosecute murderers, especially state-sponsored ones, is what the fight's about."

The response to the book in the US has helped Goldman with his grief: "People told me it meant so much to them, to know you can win those fights." Spending Christmas in Berlin ("a haunted landscape that matched my mood"), he began a new novel in which a character tries to complete the book that his wife Estrada had been working on. As a writer who was "madly in love, and who drew all meaning from that", he says, "I've been torn open, it's raw. But slowly I'm coming back."